UN pushes sustainable shift to digital finance

THE UNITED NATIONS (UN) has encouraged countries to ramp up the use of technology in financial services while ensuring its sustainability to help them achieve their Sustainable Development Goals (SDGs) by 2030.

In a report released Thursday, the UN’s Task Force on Digital Financing of the SDGs said the coronavirus-induced crisis made people more aware of the importance of digital finance as it helped in fast-tracking the release of cash handouts to affected sectors and in allowing retail businesses to go online to stay afloat, among others.

“This surge in the digital world amplifies the opportunity and the need for it to be harnessed in the longer-term pursuit, and financing, of sustainable development,” the report titled “People’s Money: Harnessing Digitalization to Finance a Sustainable Future” read.

“The international community should act in reshaping financial systems in line with sustainable development. If we fail to do so, we will fail to deliver the 2030 Agenda,” it added.

It said the push for digitalization should be “citizen-centric” where citizens are empowered both on their basic financial affairs and about public financing as well. This could also widen financial inclusion, it said.

“Digital technologies, which are revolutionizing financial markets, can be a game-changer in meeting our shared objectives,” UN Secretary-General António Guterres was quoted as saying.

The Task Force made three recommendations: advancing catalytic opportunities; building foundations for sustainable digital finance such as infrastructures, digital ID, planning, institutions and capacity-building, as well as strengthening related policies and regulations.

It laid out five catalytic opportunities to guide countries in aligning digital financing with the SDGs, namely: “to channel domestic savings into development financing; enhance financing for small- and medium-sized businesses (SMEs); digitalize public financing and make public budgets and contracts transparent; embed SDGs into decisions financial and capital markets; and shape consumption decisions through improved information and choice architecture.”

However, the UN warned that new risks may emerge as digitalization efforts ramp up, such as the increase in fraudulent transactions, illicit financial flows and security breaches.

“Digitalization may increase short-termism in financial markets. Digitalization increases the likelihood of a new generation of highly concentrated financial markets because of its tendency to provide ever-increasing benefits to scale. It may reduce an autonomous economic policy space through the loss of control over macroeconomic and monetary policy,” it said.

The Task Force, established by the UN Secretary General in November 2018, is mandated to study and recommend short to medium-term framework on how digitalization can be used to accelerate financing of the SDGs.

The recent publication is the Task Force’s final report.

The UN Secretary General has set a roadmap for digital cooperation aiming to achieve universal connectivity by 2030; promote digital public goods; expand digital inclusion; improve digital capacity-build; make sure human rights are protected; support global cooperation on artificial intelligence; establish trust and security; and build better architecture for cooperation.

Member states of the UN committed in 2019 to achieve the SDG agenda by 2030, which includes the goal to end poverty and hunger, provide quality education, promote inclusive economic growth and reduce inequality, among others. — B.M. Laforga